Fast-track merger route now covers more firms

THE GOVERNMENT HAS extended the fast-track route for approval of mergers and amalgamations to more categories of companies, a move expected to promote ease of doing business and catalyse the trend of "reverse flipping", the process by which Indian start-ups and other companies shift their domicile from overseas back to India.

- MANU KAUSHIK

The Ministry of Corporate Affairs (MCA) has notified amendments to the relevant rules, making more types of companies eligible for the fast-track merger process under Section 233 of the Companies Act, 2013. This route of approval does not involve the National Company Law Tribunal (NCLT).

The amendments allow a fast-track route for mergers between unrelated unlisted companies where aggregate borrowings, including loans, debentures, and deposits, are below ?200 crore and there is no default.

Further, the fast-track scheme will now apply to various other transactions, including mergers between a holding company (listed or unlisted) and its subsidiary (listed or unlisted), except where the transferor company is listed. Mergers between subsidiaries of the same holding company can also obtain fast-track approvals, provided the transferor companies are not listed.

Inbound cross-border reverse mergers were subject to NCLT approval until a year ago. On September 17 last year, the government amended Rule 25A for cross-border deals to speed up approvals. With the latest amendment, this rule has been aligned with Rule 25, which pertains to fast-track approvals, to avoid any ambiguities, sources said.